Generators could defer closures of some mines

SOME COAL pits could be saved from closure in the short term by cutting the rate at which the electricity generators plan to run down their stockpiles at power stations.

The future of these stocks, amounting to 33,000,000 tons, are a key consideration in the Government's review of the industry after the deferral of the plan to shut 31 pits.

At issue is whether Michael Heseltine, President of the Board of Trade, can cajole or order National Power and PowerGen to maintain higher levels of stocks than they would wish - without leaving himself open to a legal challenge by the generators. This would give several pits a temporary respite.

The current three-year contract between British Coal and the generators, which had forced them to buy more fuel than they needed, expires next March.

Part of the reason why British Coal was faced with such a drastic cut in its production - from 65,000,000 tons this year to 40,000,000 tons next - was that the generators planned to rapidly cut their stockpiles.

Michael Parker, a former chief economist at British Coal, told a conference on the coal crisis yesterday that the generators planned to reduce stocks by 12,000,000 tonnes next year and 8,000,000 in 1994. 'Slowing this destocking is an obvious short- term solution,' he said. 'It takes some of the heat off the Government and the coal industry.'

British Coal has made the suggestion to the Government in its submission for the coal review, and a Department of Trade and Industry spokesman confirmed that it was under consideration.

Under the Electricity Act, the President of the Board of Trade directs the generators to maintain a strategic stockpile of coal to safeguard electricity supplies.

But slowing the rate of destocking is only a short-term solution for saving pits and mining jobs.

Long-term demand for British coal is falling drastically due to rising coal imports, the rapid growth of gas-fired power stations and some increase in nuclear power. There are no plans to build any new coal-fired power stations and, by 2010, more than 94 per cent of today's coal plant will be more than 30 years old and approaching the end of their lives, if not shut.

A spokesman for National Power said: 'We want to reduce stocks, but by how much remains to be seen.'

Squabble over costs, page 22